Amazon Web Services, ... grew its revenue by 81 percent year on year in the second
quarter. It grew faster and with higher profit margins than any other
aspect of Amazon’s business.

AWS, which offers leased computing services to businesses, posted
revenue of $1.82 billion, up from $1 billion a year ago, as part of its second-quarter results.

By comparison, retail sales in North America grew only 26 percent to $13.8 billion from $11 billion a year ago.

The cloud computing business also posted operating income of $391
million — up an astonishing 407 percent from $77 million at this time
last year — for an operating margin of 21 percent, making it Amazon’s
most profitable business unit by far. The North American retail unit
turned in an operating margin of only 5.1 percent.

Revenue growing at 81% year-on-year at a 21% and growing margin despite:

Amazon's strategy is not to generate and distribute profits, but to
re-invest their cash flow into starting and developing businesses.
Starting each business absorbs cash, but as they develop they turn
around and start generating cash that can be used to start the next one.

Unfortunately, S3 is part of AWS for reporting purposes, so we can't see the margins for the storage business alone. But I've been predicting for years that if we could, we would find them to be very generous.

9 comments:

Those of you who frequent airports will have noticed how many advertisements there are for cloud services. Did you ever see one for AWS? I didn't think so. Amazon doesn't even need to advertise. Everyone already knows that cloud = Amazon.

Matt Asay at The Register has a thoughtful piece entitled Stuck in Amazon's web tentacles yet? You will be soon, pointing to the array of services Amazon is spawning on top of the AWS infrastructure as making it extremely difficult to move away from AWS once you've started using it.

Amazon just announced the first price cut for Glacier in just over three years since its introduction, to 0.7c/month.

The announcement also included a new S3 option for Infrequent Access:

"Prices for Standard – IA start at $0.0125 / gigabyte / month (one and one-quarter US pennies), with a 30 day minimum storage duration for billing, and a $0.01 / gigabyte charge for retrieval (in addition to the usual data transfer and request charges). Further, for billing purposes, objects that are smaller than 128 kilobytes are charged for 128 kilobytes of storage. We believe that this pricing model will make this new storage class very economical for long-term storage, backups, and disaster recovery, while still allowing you to quickly retrieve older data if necessary."

"In the past three months, Amazon Web Services (AWS) had made about as much money – $521m ... – as its online shop did in the US and Canada. The public cloud has more than one million active customers in 190 countries, we're told."

Up from $391M in Q2, or 33% in 3 months. Revenue for the quarter was $25.35bn but, in a surprise move, Amazon made money:

"Earnings per share were $0.17 up from an earnings loss per share of $0.95 this time last year. Analysts were expecting a loss of $0.13 per share and revenues totalling $24.9bn this quarter; Amazon beat both."

"Amazon took in 39.3 percent of e-commerce spending from Nov. 1 through Dec. 6, up from 37.9 percent during the same period a year earlier, according to Slice Intelligence, which gathers data through e-mail receipts of 3.5 million shoppers. You’d have to combine the Web sales of the next 21 retailers, including Wal-Mart, Target, Best Buy Co., Macy’s Inc. Home Depot Inc., Nordstrom Inc. and Costco Wholesale Corp., to match Amazon’s share, Slice data shows."